Speedy Delivery Service, Inc. has always rented their delivery truck. Speedy decided to replace the rented delivery truck by purchasing a new truck. The following are the facts for the new truck Speedy just purchased: Date on which truck was purchased ..................... March 1, 2021 Purchase price ..................................................... $64,800 Method of payment .............................................. Cash Estimated life ....................................................... 6 years Estimated value at the end of 6 years .................. $0 Depreciation method ............................................ Straight-Line The following is a partial list of the accounts in Speedy’s General Ledger. These are the only accounts you need for this problem. Cash Truck (asset account) Accumulated Depreciation – Truck Depreciation Expense Requirement 1 Prepare the General Journal entry to record the purchase of the new delivery truck on March 1, 2021. Requirement 2 Calculate the amount of monthly depreciation for the new truck. Requirement 3 Prepare the March 31 General Journal adjusting entry to record depreciation for the month. Requirement 4 What would be the balance in the Accumulated Depreciation–Truck account after the 18th month’s depreciation adjusting entry has been made? Requirement 5 If Speedy had estimated that the life of the truck was 4 years, what would have been the amount of monthly depreciation?
Speedy Delivery Service, Inc. has always rented their delivery truck. Speedy decided to replace
the rented delivery truck by purchasing a new truck. The following are the facts for the new truck
Speedy just purchased:
Date on which truck was purchased ..................... March 1, 2021
Purchase price ..................................................... $64,800
Method of payment .............................................. Cash
Estimated life ....................................................... 6 years
Estimated value at the end of 6 years .................. $0
The following is a partial list of the accounts in Speedy’s General Ledger. These are the only
accounts you need for this problem.
Cash
Truck (asset account)
Depreciation Expense
Requirement 1
Prepare the General
March 1, 2021.
Requirement 2
Calculate the amount of monthly depreciation for the new truck.
Requirement 3
Prepare the March 31 General Journal
Requirement 4
What would be the balance in the Accumulated Depreciation–Truck account after the 18th
month’s depreciation adjusting entry has been made?
Requirement 5
If Speedy had estimated that the life of the truck was 4 years, what would have been the
amount of monthly depreciation?
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